Dynamic Enterprise-Wide Optimisation – IO’s Holy Grail

4, Aug, 2016

Even though the structural benefits associated with an Integrated Operations (IO) deployment can be more than enough to build an effective business case, it will not convey how your organisation can operate its value chain in a fundamentally different way. The real exiting part of an IO program, the one that can truly transform your value chain’s performance, lies in IO’s promise to empower your people in such a way to enable the entire value chain to be dynamically optimised in real time.

Many people who work in organisations that have already achieved a high level of functional excellence regularly point out that they do optimise their operations in real time, especially where a culture of short term interval control is in place. However, what we find is that individual departments often “optimise” locally, at the expense of the global optimum performance of the value chain.

Dynamic Enterprise-Wide Optimisation therefore occurs when you present your people with the right context and awareness to make intelligent real time decisions, and you have fostered a culture that value global optimisation of your value chain – sometime at the expense of the many local optimisations available. Put simply, value is not maximised when each individual function performs at its peak. Rather, value maximisation is delivered when each function is focused and rewarded on ensuring that supply chain bottlenecks are fully utilised.

Beware the knee-jerk

Optimisation is not a process of becoming more reactive though. True dynamic optimisation can only be achieved where a strong culture of “plan the work, work the plan” is in place, there exists a highly collaborative working relationship between planners and execution personnel, and the reconciliation processes in place lead to better planning and not just to non-accountable explanations of poor compliance to plan.

Dynamic Enterprise-Wide Optimisation largely occurs within a well-constructed plan, one that calls out the constraint of your value chain, and provides guidance on how to submit the whole business to that constraint. This allows personnel operating along the value chain to then find creative ways to get the absolute best performance out the chain by exploiting the constraint in real-time. That is Dynamic Enterprise-Wide Optimisation.

Real Time Optimisation Benefits

There are two main areas where real-time optimisation of the value chain can realise significant benefits:

Recovery from Major disruption – All large scale value chains suffers from some form of major disruption at some stage i.e. adverse weather, catastrophic failure of a major piece of infrastructure or a social event like industrial action. Recovery from these events can occur in a much more coordinated fashion in an IO environment, and often at significantly reduced times. The production and safety benefits associated with better management of these high impact, low frequency events can be staggering. Although our experience tells us that delivering an IO program will ensure an almost-immediate reduction in recovery time for these events, it is an ongoing focus on understanding why those improvements were delivered and how each function contributes to recovery which enables Dynamic Enterprise-Wide Optimisation of the recovery process to occur.

Real time deviation management – The continuous monitoring of the performance of your value chain against a best possible plan, accompanied by taking consistent small actions aimed at hitting, or outperforming the plan can revolutionise what you think is possible for the performance of your organisation. The sheer amount of small sub 3 minute delays and other cross functional inefficiencies that plague a “normal” production day is truly mind-blowing.

By providing your people with information that is presented in a way to highlight these inefficiencies, and train them on how to hunt for better performance across key interfaces, you can lift both the average and peak performance of your value chain by a significant margin.

Continuous Improvement

It is beyond the scope of this post to go into a detailed discussion about the value of continuous improvement in an IO deployment, yet it is important to note that we view this as the cornerstone of a sustainable, high performing value chain, and becomes the main mechanism in which your people find ways to optimise your value chain in a continuously more sophisticated manner.

Most people’s natural desire to improve and do better is surprisingly large, and all that organisations need to do to harvest this potential is implement a simple system of capturing, evaluating and implementing these ideas, as well as foster a culture where improvement thinking is encouraged and celebrated. When you have your entire workforce “tuned in” to improvement, you can accelerate the results you want to achieve with your IO program many times over.

Conclusion

When an IO program sings, the results are called Dynamic Enterprise-Wide Optimisation. In such a state you find individual functions able to perform at peak levels when required, but most importantly they also know when to pull back in order for the whole value chain to perform at its peak. Performance across interfaces destroys minimal value, and your people are conditioned and supported to continuously find ways to fine-tune your operations. Most importantly, you have the culture and processes in place to deal with any circumstance in real-time, as well as the organisational ability to sustainable learn and improve on an ongoing basis.

This truly is the holy grail of operations, yet unlike the holy grail of medieval times, the promise of Integrated Operations is very real, and very achievable to the organisation with